On the nexus between industrialization and carbon emissions: evidence from ASEAN + 3 economies

This paper examines the impact of economic growth, energy consumption, financial development, and industrialization on environmental degradation in 8 selected ASEAN + 3 countries covering the period 1994-2018. The autoregressive distributed lag model pooled mean group was applied to estimate the long run and short relationship. The fully modified ordinary least squares, dynamic least squares, and seemingly unrelated regression were applied to check the robustness of pooled mean group. Furthermore, panel Dumitrescu and Hurlin causality test was utilized to explore the causal relationships among the variables. The results of cointegration tests confirm the presence of the long run cointegration relationship. The empirical findings, in the long run, demonstrate that the elasticity of economic growth is negatively interrelated to environmental degradation. The elasticities of energy consumption and financial development showed a positive relationship with environmental degradation. The elasticity of industrialization has a negative connection with environmental degradation. The robustness results show some conflict with the autoregressive distributed lag model pooled mean group results. Dumitrescu Hurlin panel causality demonstrates a bidirectional causality between economic growth and environmental degradation, energy consumption and environmental degradation, and economic growth and energy consumption. These results confirm that energy consumption and financial development harm environmental quality in selected countries through exudating more CO₂ emissions in space, while economic growth and industrialization reduce environmental degradation by mitigating exudate CO₂ emissions.